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When externalities exist, buyers and sellers

A. do not neglect the external effects of their actions, and the market equilibrium is not efficient.

B. neglect the external effects of their actions, and the market equilibrium is not efficient.

C. do not neglect the external effects of their actions, and the market equilibrium is efficient.

D. neglect the external effects of their actions, but the market equilibrium is still efficient.

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Romarie Khazandra Marijuan
Romarie Khazandra MarijuanLv10
27 Jan 2021

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Related questions

2a)

A market in which there are neither external benefits nor external costs is:

Select one:

a. efficient.

b. inefficient.

c. efficient and equitable.

d. impossible.

2b)

According to the special-interest theory of government, government officials and policymakers:

Select one:

a. are assumed to maximize social good.

b. tend to listen to small groups of people who contribute money to their political campaigns.

c. manage resources to maximize efficiency.

d. have a strong incentive to ensure that society's members equally benefit from a project.

2c)

Scientific research is subsidized by the government because

Select one:

a. it yields benefits to consumers and producers who did not participate in the research.

b. researchers are under-paid by private firms, so the government must make up the difference.

c. much scientific research takes place at state-funded universities.

d. scientific research has no market value so would not be undertaken without government intervention.

2d)

The forces of supply and demand will provide a quantity that is

Select one:

a. less than the efficient quantity if a good generates external benefits.

b. more than the efficient quantity if a good generates external benefits.

c. exactly the efficient quantity if a good generates external benefits.

d. either more than or less than the efficient quantity if a good generates external benefits. It is impossible to know whether it will be too much or too little without more information.

When negative externalities like pollution exist, competition leads to:

a. too few goods being bought and sold.

b. a socially efficient outcome.

c. more production than would be efficient.

d. a market equilibrium price that is too high.

10. If a good has an external benefit(positive externality associated with the production of the good), a market left unregulated will produce

a. less than the efficient amount.

b. the efficient amount.

c. more than the efficient amount.

d. an amount that may be more than, less than, or equal to the efficient amount depending on how large the external benefit is relative to the private benefit.

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